[Ticker] EU launches third case against China’s export restrictions

The European Commission outlined on Wednesday a new way of assessing whether Chinese companies are exporting at unfairly low prices, as Beijing demands it no longer to be treated as a special case.

The European Union has launched dispute proceedings against China in the World Trade Organization over import duties and other alleged measures involving raw materials. Failure to do so could spark a trade war.

Earlier this month, during an EU-China summit, European Council president Donald Tusk cautioned China to respect the worldwide system on global trade practices. But the designation was set for 15 years, meaning it will expire on December 11 this year. Should both sides fail to reach an agreement within 60 days, the commission could ask the WTO to set up a panel to rule on the legality of the Chinese export restrictions.

The new plan would allow for high tariffs to be imposed on imports deemed to be priced below international-market levels and accelerate anti-dumping procedures, the commission said.

It was slapped with non-market-economy status as a “temporary provision” when it joined the WTO in 2001. But free-trade champions such as the Nordic countries are more likely to back awarding China the coveted status, arguing it could open the door for Beijing to inject more money into Europe’s stagnant economy, a move that would boost infrastructure investment and jobs.

The discussion “is about how to adapt our trade-defense instruments to deal with the realities of overcapacity and a changing worldwide legal framework”, said European Commission Vice President Jyrki Katainen. Of 34 ongoing investigations, 22 concern China, the most notable related to different grades of steel. “This is the new proposal”, Malmstrom said.

China is undergoing a regular two-yearly review of its trade policies at the WTO this week, in which the body’s other 162 members get to quiz its officials and critique its policies.

The duties, the European Union says, limit exports of these products for companies out of China, distorting the market and favoring Chinese industry at the expense of companies and consumers in the EU.

The EU and China agreed at a joint summit last week to discuss how to deal with overcapacity, although it is not clear whether this goes beyond production of steel. The commission will make a formal proposal later this year.